The company announced the 2023 annual report and the 2024 quarterly report. In 2023, the company achieved revenue of 1,685 billion yuan, and realized net profit of -88 million yuan, -143.00% year over year; in the first quarter of 2024, revenue of 124 million yuan, -75.22% year on year, achieved net profit of 74 million yuan, or -10.28% year on year. Although the company's recent performance has been affected by the slowdown in the offshore wind power industry, in the future, with the gradual release of demand for installed offshore wind turbines, the company will fully benefit as a leading offshore wind power tower pile foundation company, and will still maintain the company's purchase rating.
Key points to support ratings
Affected by multiple factors, the company lost money in 2023. The main reasons for the company's loss in 2023 were 1) the decline in product prices due to the “rush to buy” and the phased lack of market demand after the “rush to buy”, and the increase in depreciation and amortization of the new base, which put pressure on the company's profitability. The company's gross margin in 2023 was 9.77%, -4.98pct year on year; 2) Due to the impact of the settlement schedule of completed projects during the “rush to install” period, the company's related accounts receivable and contract assets changed over a long period of time. Assets have been depreciated In preparation, a total of 184 million yuan of impairment will be calculated for the whole year.
Some long-time accounts receivable were recovered, and net profit returned to mother for the first quarter of 2024 was corrected sequentially. Although in the first quarter of 2024, the company continued to be affected by the postponement of the Seabreeze project, and revenue declined year-on-year, as some of the company's long-standing accounts receivable began to be repaid, bad debts were prepared to return 63 million yuan in the first quarter. At the same time, the wind speed of the wind farm in which the company participated was relatively good, achieving an investment income of 55 million yuan. In the first quarter of 2024, the company achieved net profit of 74 million yuan to the mother, which reversed losses.
Demand for installed sea breeze is expected to be released at an accelerated pace, and the company's sufficient production capacity reserves may fully benefit. According to the company's announcement, the total grid-connected capacity of the “14th Five-Year Plan” offshore wind power plan in domestic coastal provinces and cities is close to 60 GW. Currently, there is still more than 30 GW of grid-connected installed capacity that has not been released. It is expected that large-scale construction will be carried out in 2024-2025. Judging from the pace of project construction, it is expected to be about 11-12 GW connected to the grid in 2024, and the demand is highly deterministic. At the same time, as postponed projects in various provinces and cities have made positive progress one after another, seabreeze contests have been launched in Guangdong, Fujian and other places, approval and tenders for projects in Zhejiang, Shanghai, etc., and the continuous release of large demand for installed capacity, it is expected that offshore wind investment and construction will accelerate.
Currently, the company has sufficient production capacity reserves. It has multiple production bases such as Haili Offshore, Haili Equipment, and Haiheng Equipment. The infrastructure of Haili Wind Energy Base, Shandong Dongying Base, and Weihai Rushan Base is expected to be put into production in 2024. At the same time, the first phase of the Jiangsu Qidong base is also expected to be put into operation in 2024. In addition, the Jiangsu Binhai base, Zhejiang Wenzhou base, and Guangdong Zhanjiang base are also being planned and built. With the release of future demand for offshore wind installations, the company is expected to fully benefit.
valuations
Due to the slowdown in the offshore wind power industry, taking into account the progress of the offshore wind project, we lowered the company's profit forecast. We expect to achieve operating income of 34.30/59.75/6.928 billion yuan in 2024-2026, achieving net profit of 3.04/6.43/781 billion yuan, EPS of 1.40/2.96/3.59 yuan. The current stock price corresponds to a PE of 36.7/17.3/14.3 times. Although the company's recent performance is affected by the slowdown in the offshore wind power industry, the future will As a leading offshore wind tower pile foundation company, the company will fully benefit from the gradual release of demand for installed offshore wind turbines, and will continue to maintain its purchase rating.
The main risks faced by ratings
The installed capacity of offshore wind power falls short of expectations; the risk of fluctuations in raw material prices; capacity expansion falls short of expectations; industry competition intensifies.